Purchases Pushed by Freddie Mac

Cheaper valuations in March led to a boost in mortgage bonds for Freddie Mac for the second month in a row. The annualized growth rate for the mogul mortgage company is now at 17.2 percent.

The first three months of the year showed a 3.0 percent growth for the company, placing it in a position to take advantage of the modest widening of mortgage debt spreads. Freddie Mac provides liquidity to the US mortgage market through a charter by Congress, buying mortgages from lenders and allowing them to provide more mortgages to borrowers. The company then bundles some of the loans into securities and sold, while others are retained. The difference in the yield and the interest paid on the debt amounts to a profit for Freddie Mac.

The company came in with both feet during this years widening, just as it did in November of 2005. Freddie Mac scooped up mostly fixed-rate MBS, causing a slight rise in their MBS holdings by other companies. Holdings of adjustable rate MBS remained mostly unchanged. Though mortgage bonds were flat, mortgage purchases by Freddie Mac were up by almost 50 percent, a good indication of near future growth.

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